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Italian to replace compatriot on ECB board

FRANKFURT — Euro-zone finance ministers have approved Lorenzo Bini Smaghi of Italy to become the newest member of the European Central Bank's executive board, replacing Tommaso Padoa-Schioppa, also of Italy, whose term ends on May 31.

At a meeting on Thursday in Brussels of finance ministers from the 12 countries that use the euro, Bini Smaghi, a senior official in the Italian Ministry of Economy and Finance, won the nomination without a fight.

His victory comes despite worries that replacing an Italian with a compatriot will reinforce a tendency to always have the four largest euro-zone countries - Spain, France, Italy and Germany - represented on the bank's executive, at the expense of the euro zone's smaller members. "He's an excellent candidate; so excellent that there were no other candidates," Finance Minister Domenico Siniscalco of Italy said. "I'm happy for the ECB, for Lorenzo and for the Treasury."

Nominations to the ECB's six-member executive board, which includes President Jean-Claude Trichet, have become political flash points as individual European countries vie to place their national favorites at the ECB.

Last year, Madrid pushed through a Spanish candidate to the board, Manuel González-Páramo, following protests from smaller countries, which wanted to nominate a Belgian to the post. By May 31, 2006, euro-zone countries must also decide who will succeed Otmar Issing of Germany, the powerful chief economist of the ECB and a member of the executive board.

The deal struck in Brussels on Thursday suggests that Germany will follow the Spanish and Italian examples. "Now that Spain and Italy got their men, the public in Germany is going to expect a German replacement for Issing," said Thomas Mayer, chief Europe economist at Deutsche Bank.

But Jean-Claude Juncker, the prime minister of Luxembourg and chairman of the group of euro-zone finance ministers, sought to dispel the notion that any unwritten precedent was being set. "The voices were positive for Smaghi, although I pointed out that it can't be the rule that representatives of larger states at the ECB are replaced by representatives of the same large states," he said in Brussels, Bloomberg News reported.

Belgium, Ireland, Luxembourg and Portugal have never been represented on the executive board. In 2002, Christian Noyer of France surrendered his board seat to Lucas Papademos of Greece, the ECB's current vice president. At that point, it was decided that Trichet, also a Frenchman, would become head of the ECB a few years later.

Smaghi, 58, has a doctorate from the University of Chicago in economics and worked for four years in the 1990s at the European Monetary Institute, the predecessor organization to the ECB. Since 1998, he has been director general for international affairs at the Italian Ministry of Economy and Finance, formerly known as the Treasury, and has represented Italy in major international economic organizations.